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Maximizing Your Loan Forgiveness in the Paycheck Protection Program

Nicole Vullo Nicole Vullo


Many small business owners have already applied for a Paycheck Protection Program (PPP) loan. The PPP was created as a way for businesses to be able to keep employees on payroll. Some borrowers have already received their funding. Although you may have already received your PPP loan, there are still some vital considerations to focus on. These will help borrowers maximize on the amount of loan forgiveness received.

The actions borrowers take now will impact the amount of possible loan forgiveness and it is crucial to begin the planning process immediately.

How Much of the Loan Is Forgiven?

According to the SBA, loans can be forgiven if employees remain on payroll during the eight-week period after the loan is funded. The money can also be used to cover specific business-related expenses. Please note that the actual amount that is forgiven will vary for each organization.

We have put together a few helpful tips to guide you having the best chance to achieve complete PPP loan forgiveness.

Let us recap what expenses are covered under the Paycheck Protection Program:

  • Employee payroll expenses
  • Payments of interest on mortgage obligations
  • Rent
  • Utility payments
  • Interest on other debt obligations that were incurred before the covered period.

Borrowers must spend these loan proceeds by eight weeks after receipt of funds.

Based on these restrictions, some lenders have suggested that borrowers have a separate bank account to ease on expense tracking. This will also make it easier to identify the loan proceeds that have been properly used and qualify for forgiveness.

It is important to understand that at least 75% of the loan must be designated to payroll. Although it is unclear what the repercussions will be for not meeting this requirement, it is possible it could lead to the loan not being forgiven or other penalties.

Once your PPP loan is funded, an eight-week time frame begins for tracking eligible disbursements that may lead to partial or complete forgiveness of the Paycheck Protection Program loan. Please note this eight-week period begins at date of funding. Records are required to track and prove expenses such as payroll forms, tax forms, invoices, receipts, and banking records.

PPP loan funding is only the first step to take in making your business operations run smoothly during these unprecedented times. Businesses should prepare now to get the most value out of their loan forgiveness. Early actions will lead to the most forgiveness.

As we are learning to navigate through these times of uncertainty and adjusting to our new normal, we here are at The Foresight Companies want to be your go-to source for all topics related to your business operations.

Please visit our COVID-19 new Business Operations Resource Center frequently as we continue to update as changes are occurring.

If you have any questions or concerns, please do not hesitate to pick up the phone and give one of us a call at 1-800-426-0165.  

*Please note that as information is updated and modified, terms and conditions are subject to change.

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